Lloyd’s has launched an insurance policy to protect cryptocurrency held in online wallets against theft or other malicious hacks.
The first of its kind liability policy, with flexible limits from as little as £1,000 (US$1,281), was created by Lloyd’s syndicate Atrium in conjunction with Coincover to protect against losses arising from the theft of cryptocurrency held in online, hot wallets.
It is a new type of liability insurance policy with a dynamic limit that increases or decreases in line with the price changes of crypto assets, which means the insured will always be indemnified for the underlying value of the asset even if this fluctuates over the policy period, explained Lloyd’s in a statement.
The policy is backed by a panel of other Lloyd’s insurers, which includes TMK and Markel, all of whom are members of Lloyd’s Product Innovation Facility (PIF).
As part of the Future at Lloyd’s ambition to be the world’s most customer-centric digital insurance platform, the facility is an important step towards building a marketplace that offers better value for the changing and diverse needs of customers through highly-responsive, cutting-edge risk management products and services, said Lloyd’s in the announcement about the product.
This is the second new insurance product to be backed by PIF members in recent months. The first – a profit protection policy for hotels with an innovative event-based trigger – was launched in September.
“There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular,” said Matthew Greaves, underwriter, Atrium. “It is a testament to Lloyd’s that the market has put together an innovative solution to mitigate these new risks and protect against theft – from physical as well as online vaults – thereby providing customers with piece of mind that their assets are safe.”
“We are delighted to have worked with Atrium and the Lloyd’s PIF members to bring such a unique and timely solution to the crypto asset market,” commented David Janczewski, CEO, Coincover. “As the crypto asset market heats up again at the start of 2020, a new wave of crypto-curious customers are standing by at the ready to jump in, having previously been put off by the lack of adequate protection against theft and loss.”
With this new policy, Janczewski added, “we can remove these barriers and broaden the appeal of crypto. It represents another step forward in enabling cryptocurrency adoption.”
James Gadbury, senior broker, Prospect, the insurance broker that worked with Atrium and Coincover to create the policy, said: “We are delighted to have provided Coincover with this new insurance cover, which demonstrates the innovative and entrepreneurial spirit of Lloyd’s. We believe Prospect and the wider insurance market should support this rapidly developing sector as it moves into the mainstream.”
“As more money flows into the crypto asset market, losses from hacks are on the rise. Nevertheless, cryptocurrency companies have found ways to protect their digital assets from theft and, by working closely with Lloyd’s underwriters, to insure losses that do slip through the net,” according to Trevor Maynard, head of Innovation at Lloyd’s.
“Lloyd’s is the natural home for insurance innovation because of the unique ability of syndicates to collaborate to insure new things. I am delighted that our Product Innovation Facility – now with almost £150 million [US$192.2 million] of capacity and 27 underwriters, is providing a fast route to increase insurance capacity for difficult and hard-to-insure risks,” Maynard continued.
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